STOCK WATCH

Aro Granite(100.00) is one of the largest manufacturer and exporter of modular granite tiles and slabs with the share of more than 5% of India’s total export of granite products. Inspite of sharp rupee appreciation in last few months it managed to report satisfactory nos for the June qtr. Total revenue was flat at 25 cr but PAT declined by 10% to 3.70 cr registering an quarterly EPS of more than 5 Rs. To meet the increasing demand, company is increasing its tile capacity substantially to 5,40,000 sq mtr from 1,80,000 sq mtr, whereas slab capacity will be enhanced to 3,90,000 sq mtr from 2,95,000 st mtr. This expansion got delayed a bit and is now expected to get complete in current month only ie July 2007. So the revenue from the expansion will start kicking in from the third quarter of current year. Hence, it may clock a turnover of 150 cr and NP of 19 cr for FY08. This translates into EPS of 26 Rs on equity of 7 cr. At a modest discounting by 6x times, it should trade above 150 Rs. Moreover FY09 will be a bumper year for the company due to full impact of expansion. Hence, despite lack lustre performance for the June qtr scrip hasn’t fallen and is infact being accumulated by shrewed investors.

After encouraging nos for the March quarter GNFC (130.00) has once again announced excellent result for June quarter. Despite some disruption in its plant in early June, it reported net sales of 574 cr and PAT of 76 cr. Company is working towards converting its Ammonia Feed Stock from Low Sulphur Hay Stock (LSHS) to natural gas and will be the first company to do so. Secondly it is also planning a Nitrous Oxide (N2O) Abatement project under a clean development mechanism which will fetch additional 18 cr thru carbon credit. It is also gradually ramping up both its methanol plants at an investment of Rs 140 crore and is putting up a Precipitated Calcium Carbonate olant with a capacity of 100 MTPD. Accordingly for FY08 it may report a total revenue of 3000 cr and PAT of 400 cr i.e. EPS of 26 Rs on equity of 155.50 cr. Hence at a P/E ratio of 6x times share price can touch 150~160 Rs in short term. Moreover scrip is trading cum dividend of 4.25 Rs.

Artson Engineering (46.00) is basically engaged in business of manufacturing tanks and terminals for refineries and petroleum companies thereby specializing in petroleum storage and handling systems. Being a BIFR company and due to non-availability of bank guarantees and other funding facilities, it is operating at much reduced capacity. But recently its CDR has been approved and Tata Project is expected to take a controlling stake in the company around Sept 2007 by infusing fresh capital. As soon as this takes place, the share price will shoot up sharply on back of re-rating by the marketmen. Besides, considering its half yly nos company is expected to end FY07 (Sept ending) with a topline of 40 cr and profit of 5.50 cr i.e. EPS of 6 Rs on equity of 9.20 cr. Moreover, along with Tata Project it has already bid for around 300 cr contract in India and UAE combined. This means company is going to see a phenomenol growth in coming years and its better to catch the scrip young.

Recently, Torrent Cables (214.00) has once again come out with flying colours for the June qtr. Sales increased by impressive 30% to 56 cr but NP zoomed up 150% to 7.30 cr registering an EPS of 10 Rs for the quarter. Notably from the last three quarters its operating margin has stabalised around 20% which is quite healthy.With huge investments lined up for power sector, demand for power cables is expected to increase substiantially in future. In order to withstand the competion and sustain future growth company is increasing its market reach through its channel partners and is also contemplating some expansion plan. Meanwhile for FY08 it is expected to clock a turnover of 250 cr and NP of 27 cr which leads to an EPS 36 Rs on small equity of 7.50 cr. Having huge reserves of around 60 cr, company may even declare liberal bonus in future.A good bet for medium to long term.